Sunday, January 17, 2010

Greece deficit-reduction (2010-01-17 EURUSD analysis)

Greece showed the European Commission with a 3-year budget plan including deficit-reduction measure plan. As the IS curve moves leftwards, interest rate goes down and this triggers a drop in EUR (from my Macroeconomics course). After the price had dropped through the uptrend channel as shown in the below graph, the trend for EURUSD has reversed and is going downwards.



The price rebounded after touching the 50%-line and is now going down to this supportive line again. Due to the bad news from Greece, it seems that this supporting line will no longer support the price as EURO is further weakened. It should be a good time for us to short EUR.

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